ICICI Bank Limited
) reported fiscal first-quarter 2014 (ended Jun 30) net profit of
INR22.74 billion ($383 million). This was up 25% from the
year-ago profit of INR18.15 billion ($306 million).
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Results benefited from top-line growth, partially offset by
higher loan loss provisions and a rise in operating expenses.
Further, though capital ratios remained strong, and loan and
deposit balances increased, asset quality deteriorated.
Performance in Detail
Net interest income grew 20% to INR38.20 billion ($643 million)
from INR31.93 billion ($538 million) in the prior-year quarter.
Further, net interest margin increased 26 basis points (bps) year
over year to 3.27%.
Moreover, non-interest income rose 32% year over year to INR24.84
billion ($418 million).
Operating expenses for the quarter totaled INR24.90 billion ($419
million), up 17% year over year. The increase was primarily due
to the bank's branch-network expansion. ICICI Bank has the
largest branch network among private sector banks in India. As of
Jun 30, 2013, the bank had 3,350 branches and 10,902 ATMs.
Provisions rose 27% year over year to INR5.93 billion ($100
ICICI Bank's credit quality deteriorated. As of Jun 30, 2013, net
nonperforming assets were INR24.72 billion ($416 million), rising
11% from INR22.34 billion ($376 million) in the prior-year
quarter. The bank's net nonperforming asset ratio was 0.69%,
increasing 8 bps from the year-ago quarter.
As of Jun 30, 2013, ICICI Bank's total advances were INR3,013.70
billion ($50.7 billion), rising 12% from INR2,684.30 billion
($45.2 billion) as of Jun 30, 2012. The bank's savings account
deposits amounted to INR888.53 billion ($15.0 billion), while
current account deposits totaled INR369.81 billion ($6.2
billion). Moreover, as of Jun 30, 2013, the current and savings
account (CASA) ratio was 43.2%.
As per the Reserve Bank of India's guidelines on Basel III norm,
ICICI Bank's capital adequacy was 17.04% and Tier-1 capital
adequacy was 11.72% as of Jun 30, 2013. These were well above the
HDFC Bank Ltd.
) fiscal first-quarter 2014 (ended Jun 30) net profit of INR18.44
billion ($0.33 billion) was up 30.1% from the prior-year quarter.
An increase in both net interest income and fee revenues were the
positives for the quarter. However, these were partially offset
by higher operating expenses. Moreover, the company reported
significant increases in deposits and loans, while credit quality
was a mixed bag.
We anticipate continued synergies from ICICI Bank's high
dependence on domestic loans, almost stable funding base,
improving asset mix and enhanced pricing power. However, we are
concerned about the highly competitive operating environment,
persistent rise in operating expenses and deterioration in credit
ICICI Bank currently carries a Zacks Rank #3 (Hold). Better
performing foreign banks include
BBVA Banco Franc
Sumitomo Mitsui Financial Group Inc.
). Both these stock carry Zacks Rank #1 (Strong Buy).